My soapbox to proclaim on hockey, football, politics, life. Spotlighted will be the Montreal Canadiens, and the San Diego Chargers, at least until the Vancouver GlassSmashers' inaugural NFL season.

Tuesday, 3 July 2012

Scott Gomez, a depreciated asset who hits the salary cap at $7.3 million

Lots of buzz about what Marc Bergevin meant when asked about Scott Gomez yesterday and he replied: "Scott Gomez is a member of the Montréal Canadiens." There was a rush to read entrails from the moment he said it, and it endures today. Some now proclaim it augurs he will be traded, others that he'll be kept as a third or fourth line centre because Tomas Plekanec will be dealt instead.

There aren't many options with regard to Mr. Gomez. Let's examine them all.

Plan A: The Buyout

The window to formally buy out Scott Gomez's contract, as any other NHL player, passed, as the time period when it is allowed under the Collective Bargaining Agreement runs from June 15 to June 30. So this option is off the table, and as Bob McKenzie for one explained, would have been grounds for dismissal if exercised. The buyout for his contract calls for him to be paid 2/3 of his salary, but the team would be saddled with cap hits of $3.5M. $4.5 M, $1.7M and $1.7M in the next four years.

The payoff would have been that the Canadiens would have saved over $3M in cash, which is no small potatoes, but isn't the primary consideration in Montréal and for a rich team, especially with the declarations made by team owner Geoff Molson when he introduced his new General Manager in May, that being a consistent Cup-contending team was the objective of the organization.

Another upside of a buyout would have been the end of the saga, a team moving forward without the constant distraction, but that benefit was seen to be less significant than the deterrent.

The downside of cashing in on these benefits is that the opportunity cost would have been much greater. The cap hits would have prevented the team from adding or retaining players who would be significant pieces on a winning team. The $3 million savings would have been negated by the potential of lost playoff revenue, merchandise sales, and lower ratings for TV partners.

Plan B: Trade Scott Gomez. Anywhere. For Anything.

It has been argued since we acquired Scott Gomez that he might become a valuable commodity in the last two years of the contract, since he might help a revenue-poor team reach the salary cap 'floor', which is the minimum amount a team must spend in salaries to players in a season.

Due to the peculiarities of the salary cap system enshrined in the CBA, the total amount of money paid over the lifetime of the contract is averaged out equally over the years it runs, independent of the annual amount actually paid out to the player. In Mr. Gomez's case, and in many others, the contract is 'front-loaded', and pays the player more of the total amount in the first few years of the contract, and a lower amount at the end of the contract.

Scott Gomez is due to receive $5.5M and $4.5M in the next two seasons, but his averaged salary cap hit will be $7.3M. So if a poor team obtained him, they could save almost two million dollars in actual dollars this season, while still technically reaching the salary cap floor, and almost three million the next. In essence, a team with Mr. Gomez gets to show $7.3M on its books as a salary hit, but actually doles out the lower figures listed the next two seasons.

This saving is significant, but ignores the reality that Scott Gomez is outrageously overpaid even if his actual salary were halved. Looking at his wage for next season is instructive. A GM could have gone on the inflated free agency market on Sunday and bought his team an Adam Burish and Bryan Allen for that amount. Even a poor team is better off spending that much money on significant players instead of a technical dodge like Scott Gomez, since they can recoup that investment with playoff revenue if they ice a winning team. Mr. Gomez isn't likely to contribute anything to a winning team at this point in his career.

Plan C: The New CBA contract amnesty

It is hoped and prayed for by some fans that the new Collective Agreement will include a contract buyout amnesty as it did when the previous one was struck. This amnesty was written in because teams had to toe a new line they didn't have to before, and many were way, way above the new salary cap of $39 million when play was due to begin in 2005. It allowed for these suddenly delinquent teams to get back in line and march under the new constraints.

There is scant hope that this will occur with the new CBA. NHL Commissioner Gary Bettman has the support of most owners, and especially the hawkish owners of the poor teams. He is expected to try to extract even more concessions from the players, and reduce further the amount of money paid out to labour.

Allowing an amnesty flies in the face of this ideology, philosophically and practically. Allowing teams like the Canadiens to get out from under the contract of Scott Gomez will only enable them to dive back into the market and sign another player to a massive contract, and provide inflationary pressure to salaries as more teams bid for a limited number of players.

This off-season, Ryan Suter and Zach Parisé are both attracting lots of offers from anxious teams. Let's imagine if the Canadiens were part of the bidding. Let's also imagine if the Flyers could get out from the Ilya Bryzgalov deal, and the Canucks from Roberto Luongo's contract. That would be three more teams bidding on Zach Parisé, and the dollars and years would creep ever upward. Only one team will be successful in signing Mr. Parisé, and the pent-up demand might then spill over onto questionable players like Alex Semin and Jaromir Jagr.

Gary Bettman and the low-revenue teams have nothing to gain from enacting a contract amnesty this fall. It will only create more bidders and greater demand for players, and generate indiscipline. If anything, Mr. Bettman will want to clamp down on escape clauses like these. Which brings us to...

Plan D: Sending Scott Gomez down to the AHL

The only practical solution to the Scott Gomez contract, short of him retiring, is for him to spend the next two seasons in the AHL, where his contract will not count against the Canadiens salary mass. Sure, they'll have to pay him the full $5.5M and $4.5M he is owed over the next two seasons, but they'll have $7.3M more in cap room both seasons, which they can invest in acquiring players through trade or free agency.

Whether he spends these next two seasons with the Hamilton Bulldogs is debatable. The team may not want a frustrated veteran poisoning the dressing room atmosphere, although Mr. Gomez is known to be a popular teammate and 'good in the room'. Also, it may not want the icetime that should go to players like Louis Leblanc, Michaël Bournival and Joonas Nattinen to be squandered on a player the organization has written off its future plans. Mr. Gomez may end up being loaned to an AHL team with no NHL parent club. More likely, he will be allowed to seek a contract in Europe and play there for a better lifestyle than riding buses in Peoria.

For a revenue rich team like the Canadiens, and considering the stated intent of ownership and the management team, sending him down to the minors is an eminently feasible and preferable way to deal with the salary cap hit.

Unfortunately for the Canadiens, there is talk that this loophole will be closed with the next CBA. Mr. Bettman will want to keep profligate teams in salary-cap-jail, where they have to sit out the auctions on July 1, rather than see a team like the Rangers send down Wade Redden and dive right back into free agency with the caproom it created, and inflame the bidding wars further.

The current CBA expires on September 15, the owners will probably lock out the players then, training camps will be suspended, and there will not be an opportunity to send a veteran like Scott Gomez to Hamilton. Players on entry-level contracts might, but Mr. Gomez would be locked out, and subject to the new strictures of the CBA upon resumption of league activities, and we may end up being stuck with him for two more seasons, dependent on how negotiations go.

Plan E: Scott Gomez spends next season in Montréal

If the loopholes are closed, there is a significant likelihood that Scott Gomez spends next season in Montréal, especially if it is abbreviated by a work stoppage. He would attend training camp and fight for a job, and the Canadiens might be less inclined to send him to the AHL if his cap hit still counted. We might see him used as a thirteenth forward pitching in when injuries strike, or as a second-wave contributor on the power play.

Which brings us back to what Marc Bergevin meant when he said Mr. Gomez was a member of the team. It is no surprise that he answered questions thus. None of the plans outlined above are time-sensitive, all he can do is wait to see how the new Collective Agreement shakes out, and then make a decision.

Until then, he's not likely to demean the player with any rash announcements or projections as to what he may do, since if there's one thing we know about Marc Bergevin is that he's a classy guy with high emotional intelligence and people smarts. He'll treat the player with respect and won't engage in any bashing or bull sessions. Geoff Molson set the tone on how he wants the team to handle its players when he repaired the relationship with former Canadiens Mike Cammalleri and Jaroslav Spacek. We shouldn't expect anything less from Marc Bergevin or anyone else on the team in dealing with Scott Gomez or anyone else for that matter.